The measure of an economy is money.
A large
economy needs a larger supply of money than does a small
economy.
Therefore, a growing economy needs a growing supply of money.
All money is a form of debt.
Therefore, a growing economy requires a growing supply of debt.

Here are letters to various media, most often the Chicago Tribune, concerning the U.S.
national debt
and the Federal budget
deficit.
Hundreds of letters have been written, all in the hopes of educating the media writers, who then could eductate their readers. Perhaps you might like to write to the media. Some addresses are below. You may write to me at:
rmmadvertising@yahoo.com
March 19, 2009: Emailed to editors of many newspapers, columnists, economics professors, Senator Durbin and Representative Kirk
In a brutish display of populist fury, excessive even by Congressional standards, the House bravely decided to punish the comparative handful who received more money than “we” think is fair. All that was missing from this mob riot, fomented by Congress and the media, were the torches, pitchforks and nooses.
Thus the House was able to accomplish something they rarely have in the 17 months since this recession began: Actually vote to do something about the recession, albeit an economically meaningless something..
Representative Earl Pomeroy, Democrat of North Dakota, screamed on the House floor. “Give us our money back,” neglecting to mention that the money would not come to us but to the government, the same government that takes “our money” in the form of taxes. No one reading this will be one cent wealthier because of the House action.
Not to be outdone, Representative Ed Royce of California, reminded this distinguished group he had voted against the bailout plan. Conveniently, he failed to remind the assemblage that without bailouts, the catastrophic, world-wide failure of the insurance and banking industries would have cost us a great deal more of “our money” than the comparatively piddling $150 million now heroically rescued.
We only can pray the Senate quickly either will pass or reject this bill – the economy won’t change either way -- so long as they get done with it and go on to something actually important.
In case you didn’t know, the bill taxes recipients of bonuses from companies accepting $ 5 billion in bailout money, regardless of whether the company was itself an innocent victim of the times, whether these employees did a good job or a bad job, deserved or didn’t deserve bonuses, or are or are not needed for the resurrection of the company. None of this matters so long as we voters get our revenge. We’re angry and someone has to pay, and I guess we really don’t care whom or why.
Rodger Malcolm Mitchell
September 18, 2007: Emailed to editors of the Chicago Tribune and the Chicago Sun Times as well as Senators Obama and Durbin
You can make a note of this prediction:
1. The economy will continue to sag.
2. The Fed will embark on a series of interest rate cuts. These will have no effect, because cutting interest rates does not increase the amount of money in the economy. (Actually, it reduces the money supply, because the federal government pays less interest on its borrowing.)
3. We will enter a
recession,
which can be cured only with
tax cuts and an increase in federal spending.
4. If the deficit continues to decline, we will enter a depression, as we have on six separate occasions in our history when the deficit declined.
Meanwhile, having learned nothing from history, Senators Clinton and Obama will campaign on
tax increases and a balanced budget.Rodger Malcolm Mitchell
November 26, 2008: Sent to Misters Obama, Kirk, Durbin, various columnists and Letters to the Editor of 25 newspapers.
Mr. Obama said on 11/25/08: "As soon as the recovery is well under way, we need to set up a long-term plan to reduce the structural deficit and make sure we are not leaving a mountain of debt for the next generation,"
Said another way, “Cutting taxes and deficit spending cure a sick economy, but when the economy recovers we’ll stop doing what made it healthy and do the opposite.”
Does this make sense? Contrary to popular wisdom, federal deficits never have caused inflations, recessions or depressions. Deficits stimulate the economy; they don’t cost taxpayers a dime (though taxes cost us trillions); and the “next generation” never pays for deficits.
A growing economy needs a growing supply of money. Deficits are the way the government adds money to the economy.
Answer this: Where will the money come from to grow our economy, if the government doesn't run a deficit?
December 16, 2002
Mr. Steve Chapman
Chicago Tribune
435 N. Michigan Ave.
Chicago, IL 60611

Dear Mr. Chapman:

I read your recent article titled, "Fiscal stimulus vows something for nothing, in which you say, "In case you haven't heard, we can't (get something for nothing)."
Actually, in the case of money, we can and do. What do you think establishes the value of a dollar? Nothing. Or more specifically, full faith and credit.
Ever since President Nixon cut the final connections between gold and the dollar, there has been no physical property that backs money. All the government promises you is if you turn in that dollar you'll receive - a dollar. No, you can't demand a piece of the Washington Monument, or Yellowstone Park. All you get for your dollar is full faith and credit.
Money is the ultimate something for nothing.
The same is true of T-bills, another form of money, backed only by full faith and credit.
History shows there never has been a time when the U.S. government has been unable to service its debts. Why. Because the government prints money.
Beginning in 1982, the Reagan years, the federal debt rose an astounding six-fold. What would you have predicted then?
Inflation?Recession? The end of the world as we know it? If so, you would have been wrong.
What happened was the most robust economy in our history.
Then when President Clinton ran a "prudent" surplus, we had a
recession.
Now that the government has again begun to run a deficit, we are climbing out of that
recession. Based on history, the larger the deficit the healthier the economy.
So, if our debt grows another six-fold, what do you now predict will happen?
If you want to understand why, read
FREE MONEY,
by Rodger Malcolm Mitchell.
Based on history, the larger the
deficit
the healthier the economy.
February 4, 2003
Ann Marie Lipinski
Editor, Chicago Tribune
435 N. Michigan Ave.
Chicago, IL 60611

Dear Ms. Lipinski:

In your 2/3/03 editorial titled, "Why deficits matter," you make several incorrect statements:
Statement: "Interest on the federal debt takes money that could be spent on guns or butter or both."
Fact: Federal interest payments add money to the economy, putting cash into the pockets of consumers, local governments and businesses. Reducing the
deficit would require increased
taxes or reduced spending, both of which "take money that could be spent on guns or butter." Which do you prefer, federal spending or consumer spending?
Statement: "(The government interest payment) will buy nothing - it will pay for money that was borrowed and has already been spent."
Fact: The government interest payment will purchase food, clothing, shelter, education, law enforcement, public works, etc. These purchases will be made by all the consumers, local governments and businesses that receive the interest payments. Again, which do you prefer, federal spending or consumer spending?
Statement: "The government is coming off those four rare years when it ran a surplus, and the economy is sluggish now . . . chronic deficit spending also makes it that much harder to grow the economy . . ."
Fact: By now you should have learned that when the federal government runs a surplus, the economy always turns sluggish. The Great Depression was preceded by six years of federal surplus. It was cured by the huge deficits of World War II. When we began to run a surplus during the height of the boom, FREE MONEY accurately predicted the recession.
All depressions through U.S. history have come during federal surpluses. By contrast, the most recent economic boom followed the massive deficits of the Reagan years. Those who cannot learn from history are doomed to repeat it.
Statement: "Today's taxpayers are barely aware of how much of their money is diverted to debt payments"
Fact: Debt payments do not "divert" money. Debt payments are identical in effect to all other federal spending: They send money into the economy. When
taxpayers pay for debt payments, this is called a "surplus." The very definition of "deficit" is government spending that is not supported by
taxpayers.Tax payments do not pay for government spending. The government can spend without
tax payments. The sole effect of
tax payments is to reduce the federal debt, thereby reducing the amount of money in the economy. If there were no debt, there would be no money.
Statement: " . . . the reckoning over
Medicare
, Medicaid and
Social Security
(will) be put off for tomorrow's taxpayers."
Fact:
Medicare,
Medicaid and
Social Security
need not be self-funded, any more than the military, NASA or Congress itself need be self-funded. The ability of the federal government to produce money -- without
inflation -- is unlimited.
Medicare,
Medicaid and
Social Security
can and should be funded by federal money creation - what you misleadingly term "deficit spending."
I would be glad to discuss the federal government budget with you, anywhere, any time and in any forum, under the condition that you publish the facts.

When the federal government runs a surplus, the economy always turns sluggish. The Great Depression was preceded by six years of federal surplus. It was cured by the huge deficits of World War II.
February 6, 2003
Dear Ms. Lipinski:

Please allow me to comment on your 2/5/03 editorial titled, "The Bush budget's disconnect."
You said, ". . . the Bush White House can't pay for all this. It wants to spend more money, but not collect the taxes to pay for it."
You misunderstand where money comes from. All government money is created - printed - by the government, in the form of bonds, notes and bills. The dollar bill in your purse is a Federal Reserve Note, backed by nothing except "full faith and credit." It simply was printed on almost-worthless paper, and it has value only because the government says so.
The government pays for everything by creating money, in the form of bonds, notes and bills.
Taxes do not create money. The government does not use
taxes to pay its bills. The government uses the money it has created, to pay its bills.
In fact,
taxes destroy money by destroying (paying off) bonds, notes and bills. By removing money from the economy,
taxes suppress the economy. All taxes do. Always.
Because money is backed only by full faith and credit, and the U.S. government has no limit of full faith and credit, there is no limit to the amount of money the government can create. The government does need
taxes.
You may ask, "If the government just prints money, without collecting
taxes, won't we have
inflation? This is a common misconception.
Inflation is loss in value of money. The value of money is based on supply and demand. Demand is based on risk and reward. And reward is based on interest rates. That is why, when
inflation threatens, the Fed raises interest rates.
Inflation always can be prevented through interest rate control. When the government prints money, inflation can be prevented by raising interest rates.
You may ask, "If interest rates are raised, won't this make borrowing harder and suppress the economy?" This is another misconception. Have you noticed that repeated interest rate reductions never seem to stimulate the economy? Historically, there is no relationship between interest rates and economic growth.
The reason: For every borrower there is a lender. High rates make borrowing less attractive, but make lending more attractive. High rates neither add nor subtract money from the economy - with one exception: When the government is forced to pay high rates this adds money to the economy.
So, on balance, high rates tend to stimulate the economy. Just ask the millions of people who own government bonds.
In summary, all taxes not only are unnecessary, they are bad for the economy, both in the short term and the long term. Historically, depressions have occurred when the government reduced the growth of money in the economy (euphemistically known as running a "surplus").
Anyone whose goal is to injure the American economy, will work very hard to reduce the
deficit.
I would be glad to discuss the federal budget deficit with you, anywhere, any time and in any forum -- your office, my office, on the radio, on TV, in a restaurant, on a street corner in the Loop -- anywhere.
Sincerely,Rodger Malcolm Mitchell

Please allow me to comment on your 2/25/03 editorial titled, "More spending, more debt."
Every type of money in America is a form of debt. (Can you think of any type of money that is not a form of debt?) Your editorials consistently use the negative word "debt," when they could as easily, and more correctly, used the word, "money."
The public does not understand that
federal debt is money, but surely the Chicago Tribune should know this. The public does not understand that if
federal debt were eliminated, all government money would disappear, but surely you should know it. The public does not understand that every depression in our history has been caused by a reduction in
federal debt, but surely you should know it.
Your editorial said, ". . .Washington has moved with breathtaking speed from a $237 billion surplus to a $304 billion
deficit in just three years." Surely you must know, the $237 billion surplus meant $237 billion was removed from our economy, and removing that money caused the recession.
Your editorial said, "The debt ceiling. That should make taxpayers want to raise the roof." In fact, there is no relationship between the amount of debt (i.e., the amount of federal money in our economy), and the amount of taxes we pay. None.
Taxes do not service
federal debt. Only money services federal debt, and the federal government has the unlimited ability to produce money, without
inflation. If you owned a money-printing machine, would you ask me for money? No? So why does the federal government ask you for money?
The federal government is not like you, or me, or any of the states, counties, cities or corporations. The federal government is the one entity in America that can produce money at will, and does not need to levy taxes or find other sources of money. Claiming that tax payers will be penalized by growing federal debt, is ill-informed or disingenuous.
I would be glad to debate these points with you, anywhere, any time and in any forum -- your office, my office, on the radio, on TV, in a restaurant, on a street corner in the Loop -- anywhere you choose. Do you have the courage of your convictions?
Kindly,Rodger Malcolm Mitchell
March 6, 2008
Public Editor
The New York Times
620 Eighth Avenue
New York, NY 10018

Subject: Bob Herbert's article titled, "The $2 Trillion Nightmare

Bob Herbert made two errors in his piece, "The $2 Trillion Nightmare," errors so serious they nullify the article's fundamental meaning.
First error: Mr. Herbert said, "The war in Iraq will ultimately cost U.S. taxpayers . . . an astonishing $2 trillion." This is completely false.
The war, and indeed all federal expenditures, will not and have not, cost taxpayers one cent. If government spending were supported by taxes, we could not have the current $9 trillion federal debt. Any increase in spending would have to be matched by an increase in taxes. When tax revenues fall, spending would have to fall. That doesn't happen.
There is no historical relationship between either tax rates or tax collections, and federal spending. In 1980, the federal debt was less than $1 trillion. During the succeeding 28 years, the debt increased an astounding 1,000%. Yet tax rates remained essentially the same and no federal check bounced.
In short, taxpayers do not and will not pay for the war or for any other federal expenditure. Mr. Herbert even acknowledges this when he quotes Mr. Joseph Stiglitz, who said, ". . . this war has, effectively, been entirely financed by deficits."
Note: Not by taxpayers, not by taxes, but by deficits.
How is this possible? The federal government, unlike state and local governments and you and me, has the unlimited ability to create money. Even during the Great Depression, when tax collections were minimal, the federal government was able to pay for make-work projects to stimulate the economy, then ramp up spending for World War II. Again, no federal check bounced. Everything was paid for with deficit spending.
Mr. Herbert's second error was again quoting Mr. Stiglitz, who said, "For a fraction of the cost of this war we could have put
Social Security on a sound footing for the next half-century or more." The implication is that somehow war spending is preventing us from putting
Social Security on a sound footing. Completely false.
Ever since the war began, the government has created the money to fund it. Now the government plans to create $150 billion to stimulate the economy. Nothing stops the government from creating the money to fund
Social Security
and
Medicare
- even universal health care.
Why do people believe the government can't afford these expenses, when it proves time and again it can? Because there is a widespread worry "turning on the presses," i.e. creating money, causes
inflation. Apparently, a 1,000% money supply increase in only 28 years is not sufficient evidence to prove the falsity of this conjecture.
During the Carter administration, money creation was relatively low and
inflation was high. During the Reagan administration, money creation was enormous, and
inflation was low. Why? Because
inflation is not caused by money creation. It is caused by too-low interest rates.
In summary, the U.S. government can pursue the war, support
Social Security, universal health care, all types of research, education, law enforcement - virtually every benefit you can imagine, and it can do all this without costing taxpayers a dime. History proves it, despite all the theories to the contrary.Rodger Malcolm Mitchell

March 31, 2003
Dear Ms. Lipinski:

This is in regard to your 1/21/04 editorial titled "Bush's blind spot."
You said, ". . . the cost of his tax cuts will . . . (put) more pressure on the federal treasury and on tomorrow's taxpayers." Both assumptions are wrong.
Federal debt is the way the government supplies the economy with money. The Golden Rule of Economics is, "A growing economy requires a growing supply of money." So for the economy to grow, the federal government must run growing deficits.
Cutting the deficit is a recipe for economic disaster. The depressions of 1819, 1837, 1857, 1873, 1893, and the "Great Depression" of 1929, all were preceded by federal surpluses. Recoveries always are created by federal deficits, i.e., the creation of money.
President Clinton inherited a healthy economy. He ran a federal surplus and created a
recession. President Bush ran a
deficit and the economy is recovering.
Taxpayers never will have to pay for the federal debt. The debtor is the federal government, not the taxpayers. The federal government and the U.S. citizens are not the same. The government is the borrower. The citizens (and others) are the lenders.
It is the borrower that must pay a debt, not the lender.
So where does the government get the money to pay its debts? By creating it. The government pays its debts by creating money, and has no need for taxes.
Some worry that creating money causes
inflation? Yet, in this time of rising
federal debt, deflation has been as big a concern as
inflation. Creating money does not cause
inflation., and never has. Inflation comes from lack of demand for money. When
inflation becomes a concern, Chairman Greenspan will raise interest rates, increasing the demand for money.
You're concerned about deficits. Since, the Golden Rule of Economics is, "A growing economy requires a growing supply of money," where will the growing supply of money come from?
Kindest regards,
Rodger Malcolm MitchellFederal debt is the way the federal government
supplies the economy with money.
April 25, 2003
Dear Ms. Lipinski:

Chairman Greenspan is one lucky fellow. The Chicago Tribune considers him "an able and patient steward of this economy." (Your 4/25 editorial titled, "Bullish on Greenspan.)
That's just what a struggling economy needs: a patient steward, rather than someone who might actually do something.
But that's unfair. The patient steward did do something. He put the phrase "irrational exuberance" into the lexicon, and one can see how effective that has been.
Anyway, the
recession is not his fault, because "a buying frenzy is hard to stop painlessly" . . . especially when the government was running a surplus which sucked massive amounts of money out of the economy.
Of course, the patient steward might have warned the government that each of the last six depressions began with a federal surplus. But hey, how is a Fed Chairman expected to know that?
And the patient steward has been "adroit" in "softening" the
recession
, "with a dozen interest rate cuts," which the book
FREE MONEY.
predicted would accomplish nothing -- and of course, have accomplished nothing.
Perhaps, rather than"softening" the
recession, he might have prevented and cured the
recession. All he had to do was pump money into the economy and more importantly, encourage Congress to pump money in.
Next time you talk with the patient steward, ask him, "Since a growing economy requires a growing supply of money, where will the money come from to grow this economy?"
Yes, Chairman Greenspan is a lucky fellow. He's not blamed for the problems of the economy, but if we recover, you'll give him the credit. All he needs to do is sit in front of Congress and mumble incomprehensibles . . . and be a patient steward.
By the way, you might be interested in www.rodgermitchell.com
Kindest regards,Rodger Malcolm Mitchell

This is in regard to your article titled, "Deficits: Danger Ahead?" printed in the May 2003 issue of the AARP Bulletin.
The primary thrust of the article is expressed in the first paragraph: ". . . too much (government) red ink could lead to an economic crisis . . ." Actually, in the history of the United States, a federal deficit never has created an economic crisis. Even the massive Reagan-era deficits, in which the debt grew six-fold in just 15 years, did not create a crisis. They created an economic boom.
The greatest economic crises are created not by deficits, but by surpluses. Take a look at these figures:

You mentioned that, "Among other things, deficits reduce the money available for needed improvements, such as for
Medicare
. . ." In fact, the opposite is true.
Deficits pump money into the economy, increasing the amount of money available for
Medicare
et al. When the government runs a deficit, it sends more money into the economy than it removes through taxes. A federal deficit is an economic surplus.
That's why deficits stimulate the economy. They add money. Federal surpluses (which, in fact, are economic deficits) remove money from the economy, which is why they cause
recessions
and
depressions. The Golden Rule of Economics is: "A growing economy requires a growing supply of money." If the government does not run a deficit, how will money be added to the economy?
Can the government run deficits forever? Can it run deficits of any size? Surprisingly, the answer is: There is no limit to the size of the debt the federal government, can service. The government has the unlimited ability to produce money.
Reagan proved that even a six-fold debt increase in 15 years can be supported. If we did the same thing today, the federal debt could increase$30 trillion in the next 15 years, not only without adverse effect, but with very positive effect.
I would be glad to discuss these points with you at any time.Rodger Malcolm Mitchell

A Tale of Two Leech Doctors
A long time ago, doctors applied leeches to their sick patients. The leeches removed blood from the patients. An adequate supply of blood is vital to a patient's health, and because removing blood does nothing to stimulate recovery, the patients' condition grew worse. This did not bother the doctors, whose minds were fixed on one cure. Leech doctors learned nothing from experience. So they continued to apply leeches, again and again.
Despite the "cure," a patient might recover, but more likely the patient will die. If a patient recovered, the leech doctor was hailed as a hero. If a patient died, everyone said the leech doctor did all he could.
Not long ago, Dr. Greenspan applied an interest rate cut to the sick economy. The interest rate cut removed money from the economy (because the federal government paid less interest on its debts). An adequate supply of money is vital to economic health, and because removing money does nothing to stimulate recovery, the economy's condition grew worse. This did not bother Dr. Greenspan, whose mind was fixed on one cure. Dr. Greenspan learned nothing from experience. So he continued to apply interest rate cuts, again and again.
Despite the "cure" the economy might recover, but more likely the economy will die. If the economy recovers, Dr. Greenspan will be hailed as a hero. If the economy dies, everyone will say Dr. Greenspan did all he could.
The only thing that will stimulate recovery is a transfusion of money, the lifeblood of the economy. Read
FREE MONEY.
, by Rodger Malcolm Mitchell, to see how to save our economy.
Sincerely,Rodger Malcolm Mitchell
June 4, 2003
Dear Mr. Steiger:

A front page article in the June 4th Wall Street Journal says, "Federal Reserve Chairman Alan Greenspan and his European counterpart, Wim Duisenberg, signaled that they are contemplating interest rate cuts soon, moves that could help stimulate sluggish economies on both sides of the Atlantic and reduce the risk of global deflation."
Chairman Greenspan believes that although the first dozen interest rate cuts did not stimulate our sluggish economy, the next one will do it. Clearly, he is lost. He is unaware that interest rates never have and never will stimulate the economy.
Only one thing ever stimulates an economy: The infusion of money. And an interest rate cut does just the opposite. By reducing the interest the federal government must pay on its debts, the interest rate cut reduces the amount of money entering the economy.
To stimulate the economy, the government dramatically must increase the federal deficit. That is the only method for adding money to the economy and for preventing a deflation. That is the only federal budget deficit
solution. Please read
FREE MONEY.
by Rodger Malcolm Mitchell, and you'll understand.
Sincerely,Rodger Malcolm Mitchell
June 20, 2003
Letters to the Editor
The New York Times
229 West 43rd Street
New York, NY 10036

The various Medicare drug plans are needlessly complex, and this complexity is based on a tragic misunderstanding.
Congress believes the government cannot afford to pay for all the drugs Medicare recipients must buy. So, our representatives have crafted intricately convoluted plans, hoping to make seniors believe they receive benefits, while actually receiving little or nothing.
The tragic misunderstanding involves the concept, "the government cannot afford."
In truth, there is no expense the government cannot afford. The government could afford to pay for all of Medicare, even without any taxes. The government could afford to give full Medicare benefits to every man, woman and child in America. Add Social Security, and the government could afford that, too.
Consider the year period, 1982 - 1997. In only fifteen years, the federal debt rose from under $1 trillion to almost $6 trillion, a six-fold increase. How did the government "afford" to increase spending so much?
The answer: By creating money, which in financial terms is known as "borrowing."
Is there a limit to how much money the government can create (borrow)? No. Ever since President Nixon eliminated the last connection between gold and money, the U.S. government has had the unlimited ability to create money. That is why gold and money were divorced.
What was the result of the massive increase in federal debt, beginning in 1982? The economy was stimulated. That also is what happened beginning in 1940. History and economics show that increasing federal debt stimulates the economy. (And federal surpluses cause
recessions and
depressions,
which is what happened in 1929 and more recently, to President Clinton.)
Now it is 2004, and the federal debt is about $6 trillion. What would happen if once again, the debt were to be increased six-fold in 15 years? Answer: Again the economy would be stimulated, and that additional $2 trillion per year would pay for all the drugs needed by every American.
It is sad that Congress's lack of economic knowledge will doom so many Americans to health care hardship. No, it's not sad. It's tragic.
Sincerely,Rodger Malcolm Mitchell
June 26, 2003
Editor, The Wall Street Journal
Dear Mr. Steiger:

House Minority Leader Nancy Pelosi said, "The Republicans are [on a] reckless tax cutting binge . . . They do it on a weekly basis, without any sense of what it does to plunge our children into indebtedness."
This comment reveals either a lack of knowledge about our economy, or the Democrats' fear that the economy will recover while President Bush still is in office. Federal debt never has, never can and never will "plunge our children into indebtedness." The debtor is the government, not our children, who actually are the creditors.
During the period 1982 - 1997, the federal debt increased an astounding six-fold, from under $1 trillion, to nearly $6 trillion. Were any children plunged into indebtedness? No. In fact, the economy, and our children, prospered, because of the vast infusion of money.
Those "indebted" children actually are the wealthy owners of federal bonds notes and bills. Every time Rep. Pelosi gives one of her children a T-bill she increases the debt. Does she think she also is plunging the child into indebtedness?
Perhaps Rep. Pelosi was concerned that our children would have to pay additional taxes to service the additional debt. But history and economics show there is no relationship between taxes and federal debt. That's why the debt grew so fast.
The government never has and never will need tax money to service its debt. It merely rolls over its debt, which it can do endlessly.
In summary, if Rep. Pelosi's comment is due to economic ignorance, she should try to become educated, especially in her role of House Minority Leader. It's dangerous for such an influential person to be so ill-informed.
But, if her objective is to injure the American economy until election time, that's known as "treason."
Sincerely,Rodger Malcolm Mitchell

One never reads concerns that the Pentagon or Congress or the Supreme Court will go bankrupt. But, the Chicago Tribune, like most media, continually expresses concern that Social Security or Medicare will go bankrupt.
Today (8/24/03) was Medicare's turn. Quoting President Bush, The Tribune said, "(A) massive overhaul . . . is necessary so the entire Medicare system doesn't . . . go bankrupt in the not-too-distant future."
The Pentagon, Congress, the Supreme Court, Medicare and Social Security all are agencies of the U.S. government. As agencies of the U.S. government, they could go bankrupt only if the U.S. government went bankrupt.
During the Great Depression, when millions of Americans were virtually penniless, neither the U.S. government, nor any of its agencies, went bankrupt. Twenty years ago, the federal debt was less than $1 trillion. Today, it approaches $7 trillion. Yet the federal government is no closer to bankruptcy than it ever has been -- meaning, not close at all.
If you were bankrupt, you would not have enough money to service your debts. Your checks would bounce. That never has happened to the U.S. government, despite the massive debt increase, and indeed, it cannot happen.
Unlike you and me, the U.S. government has the unlimited ability to create money. That is how it is able to service a debt that has grown 7-fold in only 20 years. The government always was, and always will be able to, service its debts. And despite common knowledge, creating money does not cause inflation, as should be obvious from today's concerns about deflation.
No federal check ever has bounced. No check from the Pentagon, nor from Congress, nor from the Supreme Court nor from Medicare nor from Social Security, ever will bounce. Never.
Because no federal check will bounce, no federal agency will go bankrupt.
Once Congress and the American public understand the impossibility of federal agency bankruptcies, many of the illusionary problems facing Medicare and Social Security will disappear.
The federal government easily can afford to provide health and drug coverage for every American. The only question is, what method will be used.
SincerelyRodger Malcolm Mitchell
November 4, 2003
Ann Marie Lipinski
Dear Ms. Lipinski:

As I predicted in my several notes to you, the Clinton surplus caused a
recession and the Bush deficit caused the current recovery.
I have been invited, by the University of Missouri, to speak on this subject. If you're interested in hearing how we can solve some of the problems regarding Social Security, Medicare, education, the ecology, taxation, etc. you can see me on Monday, 11/17/03 at:
The University of Missouri
Administration Building
5115 Oak Street
Kansas City, Missouri 64112

The seminar is being run by the Center for Full Employment and Price Stability. I am scheduled to speak at 4:00 PM.
It would be nice to talk with you, before or afterward.
Kindest regards,Rodger Malcolm Mitchell
December 11, 2003
Ann Marie Lipinski
Dear Ms. Lipinski:

I'm sorry you didn't have the opportunity to attend my speech to The Center for Full Employment- University of Missouri, 11/17/03 ( "Free Money -- The Meteorology of Economics"). To see the text of the speech, go to www.rodgermitchell.com and click "Resources." Those 4,500 words will teach you more about the U.S. economy, than you can imagine.
In a related subject, a front page article in today's Chicago Tribune indicated the cost of the FBI's "Trilogy" (computer) system will cost $626 million, up from the original projection of $380 million.
Will this addition $246 million expense threaten the financial viability of the FBI? Is there a danger of the FBI going bankrupt? Of course not. The FBI is a federal agency. No federal agency can go bankrupt.
Social Security and Medicare also are federal agencies. What does this tell you about all the scare headlines, trumpeting the bankruptcy danger of Social Security and Medicare?
Kindest regards,Rodger Malcolm Mitchell
January 24, 2004
Ann Marie Lipinski
Editor, Chicago Tribune
435 N. Michigan Ave.
Chicago, IL 60611
Dear Ms. Lipinski:

This is in regard to your editorial titled "Washington's worst instincts."
For years you have spoken against federal budget deficits. Yet despite dozens and dozens of editorials, not once have you provided historical evidence that deficits negatively affect either the economy or the taxpayers.
For instance, you could have said, "Deficits cause depressions," and given historical examples. Ah, but there are no examples. On the contrary, it is surpluses that cause depressions. The Great Depression was preceded by several years of surpluses, as were prior depressions. Recovery from the Depression came with the Roosevelt war deficits.
Or, you could have said, "Deficits cause recessions," and given historical evidence. Ah, but the evidence shows the contrary. The most recent
recession
followed the Clinton surplus, and the recovery coincides with the Bush deficits.
Or you could have given examples of how deficits have been a burden on taxpayers, as you many times have claimed. Ah, but there are no examples of this, either. In fact, there is no historical relationship whatsoever between deficits and taxes.
On the contrary, deficits are merely the government's method for producing the added money an economy requires to grow. In short, federal deficits are necessary.
Your attitude seems to be, "Deficits are bad. No proof is necessary, because I just know deficits are bad, and that's that."
Ah, but your readers deserve better.Rodger Malcolm Mitchell
February 1, 2005
Letters to the Editor
The Wall Street Journal
4300 Route 1 North
South Brunswick, NJ 08852

It is widely believed that the Social Security system eventually will begin to pay out more in benefits than it collects in taxes. The Wall Street Journal is among the myriad papers publishing graphs and tables showing Social Security's eventual demise.
Social Security is a government agency, as are the military, Congress, the White House, the Supreme Court et al. Like all government agencies, it is supported not by taxes, but by federal borrowing.
Why do we never hear that the Pentagon will run out of money, despite the lack of a "Pentagon fund." Why is there no concern about the solvency of the Supreme Court? The CIA? The FBI? The FAA?
Why, alone among the hundreds of federal agencies, do Social Security (and to a lesser extent, Medicare) "risk" insolvency?
In fact, they don't. The predicted insolvency is a myth.
The federal government cannot go bankrupt, though technically it has been insolvent almost since its inception. Nor can any government agency go bankrupt.
Those who believe taxes pay for government spending will have difficulty explaining how the debt rose 7-fold in the past twenty years, yet we are no closer to bankruptcy today than we were then.
Our $7 trillion debt shows that spending has exceeded taxes by $7 trillion, and continues to exceed taxes almost every year. The government pays it's bills, not with taxes, but by creating money, and there is no known limit to the amount of money the federal government can create.
In the 18-year period from 1982 though 2000, the government created $6 trillion additional dollars, while curing the then-existent inflation and stimulating the economy.
What would happen were the government to create another 7- fold increase in debt during the next 18 years? For one thing, it could eliminate FICA, pay all Social Security benefits, and save us from all those misleading tables showing how Social Security will run out of money.
It can't and it won't. Will someone please learn a bit of economics, before driving the country mad.Rodger Malcolm Mitchell
February 4, 2005
James Kurfeld
c/o Newsday
235 Pinelawn Rd.
Melville, NY 11747-4250
Dear Mr. Kurfeld:

Since Newsday has published many articles about the future of Social Security, and it's big news today, I thought you'd enjoy trying to answer this simple quiz:
Which of the following federal agencies might go bankrupt, unless there is a change in the law?
1. Bureau of Prisons
2. Centers for Disease Control and Prevention
3. Coast Guard
4. Central Intelligence Agency
5. Department of Justice
6. Department of State
7. Department of Labor
8. Department of Transportation
9. Department of the Air Force
10. Department of the Army
11. Department of the Navy
12. Department of the Treasury
13. Social Security Administration
14. Centers for Medicare & Medicaid Services
15. Department of Health and Human Services

Answer: It is impossible for any federal agency to go bankrupt. None ever has; none ever will.
Think about it: In the 200+ year history of the U.S., through
recessions and depressions, have you ever heard of any federal agency going bankrupt? Has any federal check ever bounced?
Now tell me again why you think Social Security could go bankrupt, while no other federal agency in history has gone bankrupt.
Read my book.
Sincerely,Rodger Malcolm Mitchell
Author of Free Money, Plan for Prosperity
February 27, 2004
Ann Marie Lipinski
Editor, Chicago Tribune
435 N. Michigan Ave.
Chicago , IL 60611

Dear Ms. Lipinski:

Consider the irony in your 2/27/04 editorial, titled "Plain talk from the Chairman."
You said, "But what's really outrageous here is how little hope there seems to be for an honest, constructive debate on these critical issues (the
deficit) in the campaign.
Is it equally outrageous that you never print the opposing side, namely that the federal
deficit is absolutely necessary for our economic growth.
There have been 8 depressions in American history. All were immediately preceded by federal surpluses and all recoveries coincided with federal
deficits. You decry what you call "demagoguery and glib answers" yet you yourself take the populist approach by claiming "
deficits matter" and Social Security and Medicare are in financial trouble.
If ever you decide to look at the facts, an event I've come to assume is highly unlikely, you'll find that:
1. A federal "
deficit" merely is the government's method for creating money, and that a growing economy requires a growing supply of money. The word "deficit" does not apply to the federal government.
2. No federal agency ever can go bankrupt - not the Pentagon, not the White House, not Congress, not the Supreme Court, etc., etc. etc. - no matter how much they spend. We could eliminate all federal taxes tomorrow, and the federal government would not go bankrupt. Through good times and bad,
recessions,
depressions and inflations, no federal agency ever has gone bankrupt, and none ever will. Your concern about Social Security is completely off target.
Instead of looking at facts, you seem to be in awe of Chairman Greenspan's "talking in a language that bears only a passing resemblance to English." Here is the man who stood by helplessly, as the nation fell into
recession,
then frantically cut interest rates, time and time and time again - all to no avail. Finally, the deficit, which he hates, pulled us out of
recession.
Do Greenspan's repeated failures trouble you enough ask yourself, "Why?" No, you are mesmerized by someone who mumbles incomprehensible nonsense, which clearly you don't understand.
And you ask for "honest constructive debate?" How about a little intellectual honesty from the Tribune.Rodger Malcolm Mitchell
October 11, 2004
The Atlantic Monthly
77 N. Washington Street
Boston, MA 02114
To the Editor:
Re. The article titled, "A $2.4 Trillion Figure of Speech" (November 2004)

To balance federal budget would cause a disaster, as it always has in the past. Every depression in U.S. history has coincided with a federal surplus; Every recovery has coincided with a deficit. The "Great Depression" of 1929 followed six years of federal surpluses. The recovery came when the government ran huge deficits, first for Fair Deal projects and then for World War II.
A growing economy requires a growing supply of money, and a federal deficit is the government's primary method for adding money to the economy. With a balanced budget, even the most modest inflation would reduce the real supply of money.
Popular belief is, wars stimulate the economy. But wars just kill people. Deficit spending to finance wars stimulates the economy.
To eliminate the federal debt would be to eliminate all federal money, because all federal money is federal debt. One fundamental purpose of governments is to create money. And contrary to common knowledge, printing money does not cause inflation. It is inflation that requires the printing of money - inflation and economic growth.
Because the government has the unlimited ability to create money, Social Security never can go bankrupt. Nor can Medicare. Both are federal agencies, just as are Congress, the White House and the Pentagon. Despite massive cost overruns in military projects, no one voices the concern that the Pentagon will run out of money. It won't and it can't. No federal check ever will bounce. No federal agency ever will go bankrupt.
Because Social Security and Medicare cannot run out of money, the whole privatizing concept is a charade designed to create an issue where none exists. FICA could be eliminated tomorrow, and neither Social Security nor Medicare would be adversely affected. In fact, eliminating FICA would give the economy a huge boost, and would be politically popular, because it would benefit the middle class.
All federal taxes could be eliminated and the government would continue to operate just fine, thank you. And no, there would be no inflationary pressure, just as the huge Reagan deficits didn't cause inflation (Inflation went down during that period.)
Further, the government has the ability to pay everyone's medical bills. Having millions of Americans go without health insurance is a national disgrace -- that and the ignorance that causes it.
So why hasn't someone suggested eliminating taxes? Why does Congress continue to struggle with health care, poverty and other financial / social issues? One wonders whether politicians truly believe that the federal budget must be balanced, or do they merely pander to public misunderstanding?.Rodger Malcolm Mitchell
October 31, 2004
Ben Estes
Editor, Chicago Tribune
435 N. Michigan Ave.
Chicago, IL 60611
Dear Mr. Estes

I was disappointed in the column titled "ECONOMICS 101: THE EXPERTS GRADE THE CANDIDATES" in the October 31 Business section. The three experts, Professors Edward Snyder, Austan Goolsbee and Randall Kroszner misunderstand the basic truth of federal budgeting. Goolsbee said, "Tax cuts may have made sense before the economy collapsed, but not after. Spending is out of control."
Completely wrong.
What the three experts should have said is, "A growing economy requires a growing supply of money. Where will the money come from to grow this economy? Answer: The government adds money to the economy by spending more than it receives. A large and growing deficit is necessary for a growing economy.
"All U.S. depressions have been associated with federal surpluses and all recoveries have been associated with deficits. No sovereign nation can run out of money to pay its bills, because the government has the unlimited ability to create money.
"Money creation does not cause inflation, which nevertheless can be prevented and cured with interest rate control. Further, history shows that high interest rates do not inhibit the economy, nor do low rates stimulate the economy.
"No federal agency ever can run out of money, unless the government wills it. Neither the Pentagon, nor the White House, nor Congress nor the Supreme Court ever can go bankrupt, because they are federal agencies. Medicare and Social Security also are federal agencies and also cannot run out of money unless the government wills it. No federal check ever has bounced. So all the schemes to `save' Social Security are unnecessary, ill-informed and harmful. The federal government can support Medicare and Social Security fully, even were FICA to be eliminated.
"Because the government has the unlimited ability to produce money, all taxes are fiscally unnecessary and harmful to the economy. The government has the power to provide health care, education, infrastructure, defense, police and a desirable ecology, all without the need for taxes.
"Taxes evolved when physical assets such as farm goods and minerals were used as money. The system simplified when gold became the only `real' money. But all physical assets are scarce, money creation remained limited, and economies lurched from
recession to
recession. When U.S. money finally was divorced from gold, the government acquired the unlimited ability to create money and the unlimited power to grow our economy. Taxes became unnecessary.
"There is not one iota of evidence to indicate that a large and growing deficit is bad for the economy. On the contrary, all the evidence indicates deficits are absolutely necessary.
"So ask not why the deficit is so large. Ask why taxes exist and why the government doesn't provide the health care, education, infrastructure, etc. we need."
Unfortunately, the experts went along with the tired old concept that somehow a federal deficit is bad and the federal debt should be cut. Question for the experts: If you owned a money-printing machine, and legally could create all the money you wanted, would you ask me for money? No? Then why does the federal government ask you for money?
Suggestion for the experts: Read FREE MONEY. PLAN FOR PROSPERITY. I promise you'll learn something important.
Sincerely,Rodger Malcolm Mitchell

The Concord Coalition, founded in 1992, is an organization dedicated to eliminating federal budget deficits. To this end, Concord offers papers, press releases and speeches decrying the federal debt. Concord positions itself as experts in understanding the U.S. economy and the needs of Social Security and Medicare.
On May 5, 2005, Rodger Malcolm Mitchell, author of the book Free Money (www.rodgermitchell.com) challenged Concord to substantiate its position. He wrote to Concord's Executive Director, Robert Bixby, Policy Analyst, Dr. Josh Gordon and other Concord leaders, asking a simple question: "A growing economy requires a growing supply of money. Where will the additional money come from to grow our economy?"
By May 12, 2005, Dr. Gordon had said he didn't know the answer, and the balance of the Concord executives have been unwilling or unable to answer this fundamental question.
According to Mitchell, "Any group that makes so many statements about our economy, while criticizing those who disagree with them, and even publishes a "Tough Choices Fiscal Responsibility Scorecard," not only should be able to answer that basic question in economics, but should be anxious to do so. A full week has gone by, without an answer from the other executives at Concord, indicating the answer nullifies Concord's no-deficit position."
Mitchell continues, "The correct answer is, the federal government produces the additional money by running what misleadingly are called `deficits.' The only way the federal government can add money to the U.S. economy is by creating debt.
"Money creation by the federal government is more important today than ever, because of two factors: The trade deficit has caused a large and continuing outflow of money, from the U.S. economy. The private sector, which also creates money by creating debt, has created so much debt that further increases would result in a dangerous increase in private bankruptcies. While private borrowers risk bankruptcy, the federal government does not.
"Without substantial federal money creation (deficits), the economy will starve for money and we will slip into
recession or depression. This has happened often in the past. Every depression in American history was immediately preceded by a federal surplus and cured by federal deficits. The Great Depression of 1929 was immediately preceded by a decade of federal surpluses, and ended only when the federal government ran deficits to finance social programs and WWII.
"Concord also preaches an increase in private saving vs. spending, without defining the word `saving.' (It's debt.) But they do not reveal how an increase in private saving would be possible were the government to remove more money from the economy (taxes) than it puts in (spending). In short, the federal surplus, which Concord promotes, would make impoverish the economy and make private saving more difficult."
Mitchell ended by throwing down the gauntlet: "I challenge Concord to put up or shut up. Answer the question or fold your tents and silently slink away."
August 20, 2005
Christana Bolas
Allen Press
810 E. 10th Street
Lawrence, Kansas 66044
Dear Ms. Bolas:

It widely is understood:
1. The federal debt and deficit are too high. Our children and grandchildren eventually must pay for the debt.
2. Further, high federal debt is inflationary and a drag on our economy.
3. A federal surplus is desirable and economically prudent.
4. The federal government uses tax money to pay for goods and services
5. When taxes are not sufficient to pay for goods and services, the federal government must borrow.
6. Low interest rates stimulate our economy; high rates inhibit it.
7. One day, Social Security will begin to pay out more than it takes in. Unless changes are made in taxes or payments, Social Security eventually will go bankrupt.
8. Inflation is caused by excess printing of money by the government.
9. The Clinton
recession was caused by a combination of 9/11 terrorism, the stock market "bubble" and the Afghanistan war.
10. Mortgages, bonds and other forms of debt are not money.
Would you be interested in an article offering substantial evidence that all of the above ten statements not only are false, but diametrically false?Rodger Malcolm Mitchell
9/18/07: Emailed to the Tribune, 3 editors at the Sun Times, Senators Obama and Durbin
Here we go again.
The federal deficit is running sharply lower through the first eight months of this budget year. Growth in revenues continues to outpace the growth in spending. The Treasury Department said the deficit through May totaled $148.5 billion, down 34.6 percent from the same period a year ago.
Economic growth continues to slow. The Fed will cut interest rates to stimulate the economy.
Does this all sound familiar? It's exactly what happened during the Clinton administration. Following terrible economic advice, President Clinton and Congress began to run a federal surplus. Historically, reductions in debt have led to
recessions
and
depressions.
Why? Because they remove money from the economy.
You can make a note of this prediction:
1. The economy will continue to sag.
2. The Fed will embark on a series of interest rate cuts. These will have no effect, because cutting interest rates does not increase the amount of money in the economy. (Actually, it reduces the money supply, because the federal government pays less interest on its borrowing.)
3. We will enter a
recession,
which can be cured only with tax cuts and an increase in federal spending.
4. If the deficit continues to decline, we will enter a depression, as we have on six separate occasions in our history when the deficit declined.
Meanwhile, having learned nothing from history, Senators Clinton and Obama will campaign on tax increases and a balanced budget.
I've gone on record with my prediction. What's your prediction?Rodger Malcolm Mitchell
January 5, 2008

Very soon, the terrible word "
stagflation" will creep into the news. Stagflation is the Fed's worst nightmare.
The media will wail and wring its collective hands about the terrible dilemma in which the Fed finds itself. If the Fed raises interest rates to stop inflation, the higher rates will slow the economy. If the Fed lowers interest rates to stimulate the economy, the lower rates will acerbate inflation.
At least, that is the theory.
The facts are considerably different:

1. History shows that low interest rates are not associated with economic stimulation, nor are high rates associated with a crippled economy. In fact the reverse is true. High interest rates are associated with economic growth, because high rates force the federal government to pay more interest on its borrowing, thus pumping more money into the economy.

2. History also shows that federal deficit spending is the only government-controllable mechanism that will stimulate the economy.

So as the frightening word, "stagflation" begins to hit the news pages, and the Fed tries to blame "irrational exuberance" or makes some other attempt to relieve itself of responsibility, and you are tempted to editorialize about this terrible dilemma, please remember this:
The dual problem of inflation and stagnation, known as
stagflation", requires a dual
solution:
Increase interest rates to stop inflation and increase federal deficit spending to stimulate the economy.

Yes, the cure for this terrifying, intractable problem is that simple. You heard it here first.
For a further explanation, please go to www.rodgermitchell.com/inflation.html

This was in the news today: "By MARTIN CRUTSINGER, AP Economics Writer Fri Jan 18, 1:59 PM ET
WASHINGTON - With the economy's prospects growing bleaker seemingly by the day, politicians in both parties have rallied around the three Ts, the mantra that any stimulus package needs to be timely, targeted and temporary."
I agree with "timely." Actually, it should have been at least a year ago, so if it's done today, that would be almost timely.
By "targeted" they really mean where can we put the money that will accomplish the most good. As the Crutsinger says, "A separate study of various stimulus proposals shows that some proposals provide a much greater boost than others. Leading this category was extending unemployment benefits, which provides $1.73 in spending increases for each $1 spent during the first year of the program."
Crutsinger calls this "getting the most bang for the buck," and it's completely false. It's what I call "the first dollar misunderstanding." It's the belief that the first spending of a dollar is the only spending.
Adding one dollar to the economy adds exactly one dollar of spending neither more nor less. Let me give you an example. Let's say the government decided to add $150 billion to the economy and elected to give it all to one person, Mr. Lucky."
How much money would that add to the economy? The answer: $150 billion. Mr. Lucky would do one of three things: Spend the money, invest it or save it.
If he spent the money, it would go to manufacturers and service providers, who in turn would spend the money, save it or invest it, and on and on and on. The cycle would continue, as that $150 billion circulated through the economy.
It he invested the money, it would go to companies that provide investments, who in turn would spend the money, invest it or save it, and again the cycle would continue.
If Mr. Lucky saved the money, he would deposit in a bank that would lend the money, spend it, invest it or save it. The money would go to borrowers, investment companies other banks, manufacturers and service providers, who in turn would circulate the money through the economy.
In short, it doesn't matter where the money goes first. Each dollar floats through the economy, in a random, unpredictable manner. Whether you give your gardener or your boss $1, that money will go into the economy at exactly the same rate, i.e. instantly. So the "targeted" considerations merely will delay what long is overdue: Adding money to the economy.
With regard to a tax cut, Congress needs to consider only two questions: How soon? And how much? Sooner and more are better than later and less.
Then we come to "temporary." Why temporary? If adding money boosts the economy, why would we not do this regularly? When President Reagan increased the Federal debt six-fold in only 16 years, we had wonderful economic growth, no significant
inflation and no, your grandchildren didn't have to pay the debt. So tell me again. Why temporary?
Focus on the questions: How soon and how much?
Rodger Malcolm Mitchell

The Fed once again has cut interest rates to save the economy, and once again this will accomplish nothing, just as all past interest rate cuts have accomplished nothing, else there would be no
recession.
Presumably the Fed knows this, so its continual rate cuts must be only for show, to prove it is "doing something."
Congress plans to cut taxes, which will accomplish something, by adding money to the economy. But Congress dithers over which taxes to cut, and for how long, and how to cut taxes without affecting the deficit. So allow me to add to the dither with this suggestion:
Cut FICA.
Consider the effect. Employees would see an immediate increase in their paychecks, which they could spend immediately. Employers would see an immediate reduction in their expenses, which they could spend, immediately.
No tax cut would provide a more profound, instant stimulus to the economy than cutting FICA.
Now allow me to offer a second suggestion:
Eliminate FICA permanently.
Not only would this provide a long lasting stimulus to the economy, but Social Security doesn't need that tax. The government could support Social Security in exactly the same way it supports the Department of Defense, the CIA, the FBI, the other 400+ federal agencies, and indeed, Congress itself, none of which have an earmarked tax to support them.
How do all those agencies get by without a "FICA-like" tax. Deficit spending. Have you heard about the imminent bankruptcy of the military? Of course not. At the snap of a finger, Congress allocates $150 billion to the military. So why should that same Congress not allocate $150 billion to Social Security? Ponder on that, while we return to the main point.
Without FICA, that unfair, regressive tax on the lowest paid workers, the economy would leap forward. More jobs, higher net pay for the lowest paid, more profits for business -- no single Congressional act would be more effective in ending the
recession
-- and perhaps all future
recessions.Rodger Malcolm Mitchell
January 29, 2008
The Chicago Tribune economists have suggested a new plan to end the
recession.
Do nothing. ("The $150 billion gamble." January 29, 2008).
These economic experts explain that the "$150 billion is a huge amount to risk on a gamble . . .", not mentioning that doing nothing is even a bigger gamble. According to the Tribune experts, "the Federal Reserve . . . has taken aggressive steps to avert a recession and stands ready to do more if necessary."
Ah, how memory fails us. Chairman Greenspan took those same steps -- repeated interest rate cuts -- and accomplished nothing. We had the
recession
that ended only with President Bush's tax cuts.
And hasn't Chairman Bernanke already taken those steps, which have accomplished nothing? In fact, we already are in the recession, despite those "aggressive steps."
The reason: Despite common knowledge to the contrary, low interest rates never have stimulated the economy, because low interest rates do not give a lagging economy what it needs: Additional money. A growing economy requires a growing supply of money.
But the Tribune experts want more of the same medicine that is not working now and never has worked. They consider the $150 billion to be a big "gamble," forgetting that the U.S. government has the unlimited ability to pay its bills. This year, the government will spend $1 trillion on defense. Will any federal checks bounce? Have any federal checks ever bounced. Even during the Great Depression, did any federal checks bounce? Of course not. So what is the "gamble"?
The Tribune experts also complain that "getting Americans to spend money is not as easy as you might think." Their belief is that if the government gives out the money, and Americans don't spend it, the economy won't be stimulated.
This is known as the "first use" myth -- that somehow money ceases to exist after its first use. The Tribune experts believe if you put the government money in the bank, rather than buying something with it, the money will stop there.
What a strange philosophy. Think. What does your bank do with the money you deposit in your savings account? Answer: Your bank lends it or invests it. Either way, the money goes into the economy. It goes to borrowers, who spend it. Or it goes to providers of investments, who spend it.
Money is like water. It never stops flowing. When rain falls on the north end of a lake, the whole lake rises. Pour money into any part of the economy, and the whole economy lifts.
The Fed, and the Tribune experts, should learn from history. The Fed has one job and one tool. The job is to control
inflation. The tool is interest rates. That tool cannot also be used to stimulate the economy. Cutting interest rates has only one long term effect: To stimulate
inflation or prevent deflation.
Chairman Bernanke reminds us of the child, sitting in the back seat, turning his toy steering wheel. He thinks he is steering the car, but he is just going along for the ride.
Unfortunately, the Tribune experts remind us of the child's parents, content to let the child steer.
Rodger Malcolm Mitchell
February 8, 2008

The December issue of The Atlantic Monthly contains an article titled "Housebound," in which Mr. Clive Crook criticizes the mortgage interest tax deduction. Sadly, Mr. Crook suffers from the "first-use misunderstanding." Apparently, he believes that after a dollar is spent it ceases to exist. How else can we interpret this paragraph?
"If investment in housing goes up, investment in things that would expand the economy and improve future living standards - such as commercial building and business equipment - goes down." Where, Mr. Crook, do the billions of dollars invested in housing go? Answer: To all the industries related to housing, of course. To home builders, lumber mills, steel producers, tool manufacturers, landscapers, plumbers, painters, electricians, roofers, glaziers, to millions of thousands of workers in all these industries and in related industries.
And what do these industries and workers do with the money. They spend it on Mr. Crook's "things that would expand the economy and improve future living standards."
As if this misunderstanding weren't sad enough, Mr. Crook claims eliminating the mortgage interest tax deduction would ". . . save tens of billions of dollars which could be used to pay for other tax cuts." For reasons unknown, Mr. Crook believes the government is locked to a balanced budget and can't provide tax cuts unless it raises other taxes!
Where in history he found that notion, he doesn't say. He seems to have forgotten that President Reagan instituted massive tax cuts along with spending increases, without raising other taxes, and President Bush did the same. And, oh yes, this month Congress voted for tax refunds, without a tax increase in sight.
I doubt Mr. Crook really believes money ceases to exist after its first use, and the federal government is required to run a balanced budget. It goes deeper than that. His hidden agenda is what he calls "income inequality."
He feels it's unfair for the rich to be able to take advantage of a tax deduction the poor can't, because the rich itemize and the poor don't. Never mind that the rich can take advantage of the tax break, because they pay the most taxes. The poor don't take advantage of the tax break because they use the standard deduction, which is a tax deduction for doing nothing.
Mr. Crook is right about one thing, however: The mortgage interest tax deduction is unfair. But the reason goes beyond Mr. Crook's flawed rationale. The mortgage interest tax deduction is unfair simply because all taxes are unfair.
I challenge Mr. Crook to think of even one fair tax. Clearly the entire byzantine income tax code is unfair. FICA is unfair to lower income workers. The Alternative Minimum Tax is notoriously unfair. Import duties are unfair. Property taxes on homes are wildly unfair. Sales taxes are unfair to the lower income. All state and local taxes are unfair.
So if all taxes are unfair, then all tax deductions are unfair. Mr. Crook uses false reasoning to single out one tax deduction as unfair, simply to further his income-equality agenda.
Rodger Malcolm Mitchell
www.rodgermitchell.comrmmadvertising@yahoo.com

Email to the Chicago Tribune editors, Feb 17, 2008
The editorial, "The danger in big promises," correctly points out that Massachusetts made a serious miscalculation by promising broad, comprehensive health care coverage. It is clear that Massachusetts, and indeed no state, can provide such coverage, as needed as it may be.
The editors then go on to criticize Barack Obama and Hillary Clinton for "making big promises on health care . . . but they want to duck out before the check arrives." The Tribune editors equate Massachusetts to the federal government, a false equation.
While the Massachusetts, and indeed every state and local government are limited in what they can spend, the federal government has no such limitation. Witness the ease with which the decision was made recently to spend an additional $150 billion on defense, and another $150 billion to stimulate the economy.
In 1980, the Federal debt was less than $1 trillion. Only 27 years later, it has risen to more than $9 trillion, an amazing 9-fold increase. Has any federal check bounced? No, and none will. It is impossible for any entity, having an unlimited supply of money, ever to have difficulty paying its bills. The federal government is such an entity.
The Tribune editors make the fundamental mistake of equating federal debt with state and local debt, and even with corporate and personal debt. The federal government is unique. Even during the darkest days of the Great Depression, when millions were going bankrupt, the federal government not only paid all its bills, but sent money into the economy on make-work, stimulation projects. Then it went on to pay for WWII and afterward to re-build our allies. No problem. The federal government merely created the money.
Unlike you, me and every other debtor, the federal government never will and never can run out of money. Now, with gold no longer backing our money, the federal government finds money creation even easier.
The Tribune editors are missing the key point, however: Why are the states passing health care laws they can't afford? The answer: Because the federal government hasn't. If the federal government would pass the same kinds of laws the states have passed, Americans would receive much needed health care, and the states would not be in such terrible financial situations. The states have become desperate to solve a medical care problem the federal government easily could solve.
And why does the federal government not provide universal health care, as a modern government should? Because of the wrong-headed belief the federal government can't afford it. Nonsense. Year after year after year, the government proves it can afford whatever it wants, with no difficulty whatsoever.
The federal "debt" rises and rises, and the federal government pays interest and principal with ease -- and by the way, without
inflation. Rather than criticize Obama and Clinton for proposing much-needed health care, the Tribune would do its readers and the nation a service by encouraging even broader health care support. The country needs health care. The states know it, but can't afford it. The people know it, but they can't afford it, either. The federal government can afford it.
The next time you criticize the notion of expanded health care think of what you are doing: Denying health care to millions of desperate people, all because you have some vague feeling, unsupported by any facts, the federal government can't afford it.
People are dying. Think.Rodger Malcolm Mitchell

This is with regard to your March 13th editorial titled: "Bernanke's smart maneuver."
It is a fact that a large economy requires a larger supply of money than does a small economy. The U.S. needs more money than does California, which needs more money than does Peoria, IL.
Therefore, a growing economy requires a growing supply of money.
So where does the money come from to grow our economy? Money doesn't appear by magic. It must be created. Who creates it?
One key source is the federal government. How does the federal government create money? By deficit spending. Whenever the government spends more than it receives in taxes, it creates money.
Today, the Fed intends temporarily to pump $200 billion into the economy - for one month. This will provide a one-month stimulus for the economy. But what happens when the Fed removes that $200 billion from the economy next month?
A short term loan will not help the economy any more than the useless interest rate cuts have. There is one thing, and one thing only, that will help the economy: A growing supply of money, which requires deficit spending. The federal government must add money to the economy, not for a month, but continually and forever.
Your editorial ends with this thought: "Unlike the stimulus checks, this doesn't add to federal debt." That is exactly the problem. By not adding money to the economy, the Fed misses the opportunity to cure the
recession.
Nothing can cure the
recession., nothing can stimulate the economy, nothing but the addition of money. Nothing.

The Fed raises interest rates to fight inflation. To fight
recession, the Fed does the opposite. It cuts interest rates.
This may sounds logical except for one, very small detail. The opposite of inflation is not
recession; it's deflation. So doing the opposite of what you would do to counter inflation makes no sense when trying to counter a
recession.
We could have a recession with inflation. We could have a recession with deflation. The history of Fed rate cuts, as a way to stimulate the economy, is not a good one. The Fed under Chairman Greenspan instituted numerous rate cuts. The result: A
recession. that President Bush's tax cuts cured.
The Fed under Chairman Bernanke has instituted numerous rate cuts. The result: Today's
recession.
And please don't blame the recession on the subprime mortgage "crisis." Real estate accounts for only a tiny fraction of our economy. Mortgages account for a minute fraction of real estate. And subprime mortgages account for a minuscule fraction of that minute fraction of that tiny fraction.
We shouldn't blame the sinking of an aircraft carrier on a mosquito that landed on the stern. Even the 20-to-1 leverage these loans provide wouldn't be nearly enough to sink the gigantic U.S. economy into this recession..
So what has caused the
recession.? Lack of money. (In Fed-speak, it's "lack of liquidity.") A growing economy requires a growing supply of money, and our supply of money has not grown fast enough to accommodate our growing economy. So the economy has to shrink into
recession..
When the cost of gasoline outgrows your finances, you either must get more money or drive a smaller car. It's the same for the economy. It's being forced to "drive a smaller car," otherwise known as a
recession., because it's not getting enough money.
Have you ever wondered where money comes from? It doesn't appear by magic. Someone creates it. The federal government creates money by deficit spending. Although many people think the federal deficit is too large, in truth it is too small. When President Clinton briefly eliminated the deficit, we had a
recession,. President Bush's large deficits cured the
recession,.
Despite common knowledge to the contrary, the cure for the
recession, is deficit spending, which is the reason for the $150 billion worth of checks coming from the IRS. It's a start, though not nearly enough. At least $500 billion to $1 trillion would be more effective.
At any rate, the next time you hear some one moaning about the federal deficit being too large, ask them how they enjoyed the
recession.Rodger Malcolm MitchellApril 9, 2008 Email to the Chicago Tribune

April 9, 2008: Associated Press: "The world economy will slow sharply this year, according to an International Monetary Fund forecast, with the United States sliding into a
recession, amid housing, credit and financial slumps." Every U.S. depression, and the vast majority of
recessions,, have coincided with reduced growth in the money supply. Today again, the U.S. economy is starved for money, which no amount of interest rate reductions can cure. To a small degree, interest rate reductions actually reduce the amount of money in the economy, because the federal government is required to pay less interest on its debts.
There is one cure, and one cure only, for a
recession, or depression: Increase the money supply. How? By federal deficit spending.
The federal government creates money when it pumps more money into the economy than it removes by taxation. The $150 billion stimulus package is an example, albiet too little and too late.
To prevent a serious meltdown of our economy, the federal government must pump $500 billion - $1 trillion into the economy. The government should reduce or eliminate certain taxes and/or increase spending on certain projects.
Example: The federal government estimates its 2008 collection of the FICA tax at $821 billion. Were FICA eliminated, workers and business (each of which pays half) would benefit immediately. The
recession, would end; a depression would be prevented.
Contrary to common wisdom, this $821 billion addition to the federal debt would not cause inflation. The Reagan/Bush $6 trillion addition to the debt did not cause inflation, which easily was prevented with interest rate control.
In summary, this
recession,
was preventable and now is curable, simply by pumping money into the economy. Cutting interest rates has not, and will not, accomplish anything. Americans should be outraged at the ineptness demonstrated by Congress, the President and the Fed. There is no reason for this disaster, when the prevention and cure so easily could be implemented.

The Fed subscribes to the theory, if something doesn't work, do it again and again and again.
Rate cuts didn't stimulate the Greenspan economy. Rate cuts haven't stimulated the Bernanke economy. In fact, it is impossible for rate cuts ever to stimulate the economy, for one simple reason: A growing economy requires a growing supply of money, and rate cuts do not add money to the economy.
Now Chairman Bernanke prays the $150 billion stimulus package (which does add money to the economy) will stimulate the economy. It will, though not as much as a $500 billion or $1 trillion package would.
So the question remains, if adding money to the economy stimulates the economy, why do we wait until the economy is in trouble before adding money? Why don't we add money, regularly. The answer: Adding money adds to the federal debt, and there is an irrational fear of federal debt.
Never mind that federal debt never has had any adverse effect on any facet of our economy, nor has federal debt caused income tax increases or inflation, nor have our children ever paid for the federal debt (common arguments used against the federal debt). Despite all facts to the contrary, debt hawks simply know deep down in their souls that debt is bad. It is, in essence, a religious belief.
So we struggle along, with the Fed taking meaningless actions to prove it is doing something, while we wait for the only something that can save us: Adding money to the economy.
It truly is sad so many people must suffer, so many people must do without medical care, adequate food, good housing, good education and a modern infrastructure, just because the debt hawks have the intuition, without facts, that federal debt is bad.
Rodger Malcolm Mitchell
May 1, 2008
Email Letter to the Chicago Tribune

Your May 16th editorial, "Rich harvest," decries the $290 billion farm bill, of which you say 1/3 goes to farm subsidies. Your editor may not understand this payment is identical in effect to the $150 billion stimulus bill. Both the farm bill and the stimulus bill pump billions into an economy starved for money.
Yes, some of the farm bill money does go to wealthy farmers, which you find objectionable. But from an economic standpoint, it doesn't matter who gets the money first, so long as the money goes into the economy.
What will the wealthy farmers do with the money? Three things: invest, spend and/or save it.
They can invest it by purchasing equipment, seed, fertilizer, trucks, farm buildings and by hiring labor, all of which provide jobs in the farm, equipment, seed, fertilizer, truck and construction businesses.
They can spend it by buying cars, fur coats, diamonds, airplanes and yachts, and by going to restaurants, throwing hotel parties and generally doing what rich people do, all of which provide jobs in various industries.
They can save it by putting money in banks, so the banks can do what banks do: Create even more money by lending it, which provides jobs.
In short, virtually everything the wealthy farmers will do with the money will provide jobs in many industries, benefiting the economy. Rather than criticizing the government for paying money to wealthy farmers, you should criticize the government for not having a "manufacturers bill," a "service providers bill," a "teachers bill," a "police and fire fighters bill," a "doctors bill" etc., so more money could be pumped into the economy and more jobs created.
History proves government payments, to any part of the economy, benefit the entire economy and incidentally, have absolutely no effect on tax rates.

You asked whether the government should give tax credits to companies that underwrite public tranportation (to help save oil). The answer is "Yes," because all tax credits benefit the economy.
However, the government can do much more:
1. Raise interest rates to strengthen the dollar, so fewer dollars are needed to purchase oil and gas.
2. Direct subsidies to public transportation (better than tax credits to companies)
3. Direct subsidies to alternative energy sources, i.e. atomic energy, gasohol, wind, sun, etc.
Example: One of the concerns about gasohol is the amount of energy needed to produce it. If the government subsidized the building of nuclear energy plants, these plants inexpensively could produce the energy necessary to convert corn or grass to alcohol, thus freeing us from oil.
Why is Congress so brain-frozen it can't come up with creative
solution?Rodger Malcolm Mitchell
To: Chicago Tribune, June 12, 2008

We now are told we must fear the two-headed monster,
stagflation,
comprised of stagnation and inflation. The economy is starved for money, which causes the stagnation. The Fed's relentless interest rate cutting has contributed to inflation.
The two-headed monster can be killed only if both heads are cut off.
The Fed correctly believes inflation can be stopped by raising interest rates, an effort that surely will begin soon. Higher interest rates make the dollar more desireable, i.e. more valuable, which by definition, defeats inflation.
But what about stagnation? A large economy requires a larger supply of money than does a small economy. Therefore, a growing economy requires a growing supply of money. Congress recognized this need, which is why it voted the "stimulus package," pumping $150 billion into the economy. Though $150 billion is far too little, and somewhat too late, it is a start. ($500 billion would be better; $1 trillion would be better yet).
High interest rates also stimultate the economy, though that fact is not well recognized, even by the Fed. The federal debt is $9.4 trillion. Every 1% increase in interest rates requires the government to pump an additional $94 billion into the economy as additional interest payments. This, by the way, relates to one of the two reasons interest rate cuts never have been successful stimulatants. (The other reason: Low rates impoverish debt-holding consumers. How poorly have your CD's and bonds been paying you these days?)
In short, the only way to kill the two-headed stagflation monster is to kill both heads. The inflation head can be killed by raising interest rates. The
recession
head can be killed by federal deficit spending that pumps money into the economy.
There is no other way. Let the battle against
stagflation
begin.

On July 5, 2008, Chicago Tribune editors wrote, "The Military is in trouble. Its costs are outpacing its revenues and if those costs aren't controlled or revenue increased, the Military will become insolvent by 2019."
No more military?? Shocking, isn't it? Well actually, that's not what the Tribune editors said. Substitute "Medicare" for "Military," and you'll see what they really said. Does anyone have the answer to this question: Why is Medicare in danger of insolvency, when no other federal agency (other than Social Security) faces that danger?
Contrary to popular wisdom, Medicare taxes do not support Medicare spending. Medicare taxes limit Medicare spending.
The Military receives all its funding from the "#000000" box known as "federal deficit spending." So do the 14 federal Departments and the 400+ other federal agencies, including Congress itself. Medicare is "in trouble," only because its spending is limited by the amount of Medicare tax collected.
If Medicare were funded the same way as the Military, there would be no financial trouble and no talk of cutting benefits or increasing taxes.
Every time the Military needs money, Congress votes it. $150 billion here; $85 billion there. No problem, no talk about increasing taxes, no frightened exclamations of "Where will the money come from," and no worries about "insolvency."
Medicare (and Social Security) should not be treated as the "poor boys" of federal funding. They should be funded in exactly the same way as the Military and all the other federal agencies: by Congressional fiat.

Rodger Malcolm Mitchell
To: Editors, Chicago Tribune, July 7, 2008

John McCain says he wants to balance the federal budget. Here is why that would destroy the U.S. economy:
1. All money is a form of debt. The federal government creates money by creating debt. Destroying federal debt destroys money.
2. A large economy has more debt/money than does a small economy. Therefore, a growing economy requires a growing supply of debt/money.
3. For an economy to grow, the debt/money supply must exceed population growth, inflation and the current account deficit (money flowing out of the U.S.). Example: Assume the GDP growth goal 3%. If population grows 1%, inflation grows 3% and the current account deficit is 1.4%, the supply of debt/money must grow more than 8%. (1.01 x 1.03 x 1.014 x 1.03 = 8.7%).
The 6/08, federal debt was 9.4 trillion. Federal debt growth of 8.7% requires a deficit of $800 billion +.
"The Bush administration . . . projected a deficit for all of 2008 of $410 billion." (Associated Press, 2/12/08.) Even zero economic growth requires a deficit of more than $500 billion (1.01 x 1.03 x 1.014 x $9.4 trillion - $9.4 trillion = $500 billion).
4. History Shows: Balanced Federal Budgets Lead to
Recessions
and
Depressions. In 1997, the Chicago Tribune newspaper published an editorial headlined, "Clinton, GOP hail budget, tax deal . . . would yield the first balanced budget since 1969" Chicago Tribune, May 3, 1997."
I predicted this much-applauded act would cause a
recession
if we were lucky and a depression if we were not. We were lucky. We had the recession. If we were not so "lucky," and the surplus had lasted longer, this is what might have happened:
1817-1821: U. S. Federal Debt reduced 29%.
Depression
began 1819.
1823-1836: U. S. Federal Debt reduced 99%.
Depression
began 1837.
1852-1857: U. S. Federal Debt reduced 59%.
Depression
began 1857.
1867-1873: U. S. Federal Debt reduced 27%.
Depression
began 1873.
1880-1893: U. S. Federal Debt reduced 57%.
Depression
began 1893.
1920-1930: U. S. Federal Debt reduced 36%.
Depression
began 1929.
1998-2001: U. S. Federal Debt reduced 9%.
Recession
began 2001

It is a terrible myth that balancing the federal budget benefits the economy. It never has and it never will. Balancing the federal budget is a prescription to economic disaster. Money is the life-blood of an economy. The bigger the economy, the more "blood" it needs. Running a federal surplus is like applying leeches to a person suffering from anemia.
July 16, 2008
To: Ann Marie Lipinski

I was sorry to learn you are leaving. What do you plan to do?
I so enjoyed our correspondence. Well, perhaps not "co" nor "respond," since you never answered any of the dozens (hundreds?) of letters I sent you. But I did enjoy writing to you and telling you exactly what would happen in our economy.
My only regret was that the editors of the Tribune seemed to have neither the time nor the inclination to learn. Despite my repeatedly accurate predictions, your editors blindly continued to parrot the old "cut the federal debt and interest rates" popular wisdom.
I told you all money is debt and a growing economy requires a growing supply of debt, and the safest debt is federal debt. I told you the federal debt needed to grow significantly or we would encounter a
recession
or worse. I told you cutting interest rates would accomplish nothing but inflation. I begged you to go to www.rodgermitchell.com to learn the truth about our economy, before we fell into a
recession, stagflation or depression.
Now, all I predicted has come true. Now, rather than raising interest rates and deficit spending to prevent stagflation, the government has begun deficit spending to cure stagflation, and soon will need to raise interest rates to cure inflation. Thus, we have the deficit spending for the $150 billion "stimulus" package (too little and too late) and the bail-out of Freddie Mac and Fannie Mae and the various banks and financial institutions.
The old saw, "An ounce of prevention is worth a pound of cure" could not be more apt. Had you taken my letters and my web site seriously, you might have been able to help prevent the current financial crisis and the crises to come. To make the country whole will require even more of that deficit spending you wrote against.
Your voice was powerful. Sadly, you didn't use it to help America.
Perhaps your reasoning has been, "If experts like Chairmen Greenspan and Bernanke don't agree with Mr. Mitchell, he must be wrong." But then, how effective have those "experts" been? Two
recessions
this decade, and the experts lay the blame on oil prices, bad lending and oh yes, my all-time favorite, "irrational exuberance." In light of repeated failures, how long will these idols be considered experts?
The experts disclaim any responsibility (which I also predicted). They tell us if everything goes perfectly, the economy will be fine. But if ever there arise any problems, the experts will wring their hands helplessly and point everywhere but themselves. So what good are the experts if they are so ineffectual?
In your new life, will you have influence on decision makers? If so, it may not be too late for you to help America. If you will have more time in the future than you've had in the past, I would be glad to speak with you and/or anyone else you think might be helpful.
Kindest regards,
July 23, 2008
To: Editors of the New York Times and the Chicago Tribune

President Bush has announced he will not veto the bill before Congress that aims to cure the housing mess. The bill contains many provisions designed to help homeowners in trouble and to improve oversight of Fannie Mae and Freddie Mac.
Buried within the bill is the one key provision that will do the most toward curing the stagflation and rescuing our economy: The provision increases the statutory limit on the national debt by $800 billion, to $10.6 trillion.
The economy is starved for money, and if that additional $800 billion is pumped in, it will jump-start not only the banking and real estate sector, but the entire economy, top to bottom. That additional $800 billion will circulate throughout the economy, helping every business, every worker and every resident.
Presumably, we will hear the same, old, dire predictions that "our grandchildren will have to pay it" and that every American "owes" some part of the debt along with the same old, tired question, "Where will the money come from?"
Perhaps, at long last, the media and the politicians will begin to realize:
--Our grandchildren never have paid the federal debt. Our grandchildren never will pay the federal debt.
--We Americans do not owe the federal debt. The government does. We are not the debtors, nor are we the government. In most cases we are the creditors.
--The government has the ability to create unlimited amounts of money, which is why the government will have absolutely no difficulty servicing the $10.6 trillion debt. The government doesn't even need our tax money. Taxes could be cut to zero, and still the government could service its debt, merely by creating money. This has been true since President Nixon ended the Bretton Woods system, which tied the dollar to gold.
Now, to fight inflation, the Fed needs to increase interest rates, which would complete the rescue of our economy.
Rodger Malcolm Mitchell
Letter to Senator Obama, August 1, 2008

Your recent Email on this subject contains several errors you should correct, if your economic policies are to be taken seriously.
1. Your Email says, "Currently, our national debt is in excess of $9 trillion. That represents approximately $30,000 of debt for every American citizen -- including our children and grandchildren." The implication is that American citizens owe the federal debt. That is incorrect.
The federal government owes the debt. American citizens are not the federal government. We pay taxes. The government collects taxes. We earn money. The government creates money.
The fact that the federal government has the unlimited ability to create money, while cutting taxes, is evidence the federal debt is not owed by American citizens.
Ask an economist about this.
2. Your letter says, "The more we depend on foreign nations to lend us money, the more our economic security is tied to the whims of foreign leaders whose interests might not be aligned with ours." The implication is that foreign countries buy our T-bills on a whim or to be kind to us. That is incorrect.
Foreign countries buy our T-bills, notes and bonds for one reason only: Our T-securities are safe and pay a good rate of return. In short, coutries buy our T-securities as good investments.
At any time we wish to make our T-securities more attractive we simply could raise the interest rate. We have no reason to fear foreign leaders will stop buying our debt on a "whim."
Ask an economist.
3. Your letter says, "Also, as our national debt climbs, the amount of money we must devote annually to interest payments absorbs millions of dollars that could be invested in our schools, better healthcare or roads." The implication is that if the government borrowed less, there would be more money available for schools, etc. That is incorrect.
Government borrowing actually adds money to the economy, making more available to schools, etc. When the government borrows, it immediately sends the money back into the economy by spending on schools, etc. In addition, it sends interest payments into the economy. The more borrowing the government does, the more money is sent into the economy.
In short, government spending is not limited, and interest payments add money to the economy.
Ask an economist.
4. Your letter says, "It is unsustainable to cut taxes for the wealthiest Americans while trying to fight expensive wars in Iraq and Afghanistan, rebuild the Gulf Coast, and sustain critical government services." The implication is that large federal deficits are unsustainable. That is incorrect.
Today's federal debt is 900% higher than it was 25 years ago. The government has had no difficulty "sustaining" this debt, and in fact, has cut taxes. If federal debt grows the same 900% in the next 25 years, it will total $94 trillion by 2033, an annualized defict of more than $3 trillion. And still the federal government will have no difficulty sustaining (servicing) the debt.
The federal government actually could cut taxes to $0, and still service its debt.
Ask an economist.
5. Your letter says, "If we fail to pay our bills now, our kids will pay for them later." The implication is that our kids' taxes will have to rise to pay the bills. This is incorrect.
In the past 25 years, federal debt has risen massively, and "debt hawks" have been warning that our kids will pay for these debts. But taxes have been cut, our kids now are adults, and nobody has paid for the federal government debts.
Why? Because our kids don't owe the money. The federal government owes the money, and the government has proved it can create all the money it needs, without inflation, to service all its debts.
Ask an economist.
6. Your letter says, "I will continue to support such commonsense budgeting practices as "Pay-As-You-Go," or "PayGo" rules, which would require this approach." You describe that as "Restoring fiscal discipline." That is incorrect.
A growing economy requires a growing supply of money. Today's economy is starved for money, which is why the stimulus package helped. Unfortunately, the stimulus package was far too little and way too late, which is why additional stimulus packages are needed.
The last time a Democrat balanced the federal budget -- 1978/1979 -- a recession followed, which was cured by the Bush tax cuts. Every depression in our history has been caused by federal surpluses.
In short, a growing economy requires growing input of money from the government. Your "PayGo" rules will create another depression.
Ask an economist.
It's important for a President to see the realities of our economy, and not merely parrot popular wisdom. I would be glad to send you the book, FREE MONEY, which would help you understand the above points.
Rodger Malcolm Mitchell
September 8, 2008
Editors, Chicago Tribune

Your editorial, "Lovin' those oil speculators" was exactly right. Speculators, aka commodity traders, benefit us by adding liquidity to the market. This reduces violent price swings.
Speculators do not set oil prices. Speculators merely predict oil prices, which ultimately are set by those two great market forces: supply and demand -- for dollars and for oil.
Oil worldwide is priced in U.S. dollars. When the value of the U.S. dollar goes down, more dollars are needed to exchange for a barrel of oil.
The value of the U.S. dollar depends on several factors, one of which is interest rates. Higher rates cause the dollar's value to go up, which is why the Fed raises rates when it fears inflation. Because the Fed has cut rates so often, the value of the dollar has gone down and consequently, more dollars are needed to purchase a barrel of oil.
The Fed, by reducing the value of the dollar, has increased the cost of oil. Some speculators now predict the Fed, at last, will be forced to counter growing inflation by raising interest rates. That act will cause the value of the dollar to rise, and fewer dollars will be needed to purchase a barrel of oil.
And that one main reason the price of oil has dropped recently.

To save Lehman Brothers, and indeed, to save the economy, the government should pump money into the largest, most troubled financial and commercial (Ford, GM) institutions.
The man-in-the-street will find this unfair ("Why should big companies be saved?" "Where do we draw the line?"). But saving the biggest companies will prevent a domino effect that would roll downstream and injure us all.
The government has the unlimited ability to create money. Now, it must use this ability to pump money into an economy that is starved for money. The $150 billion stimulus package was a too-little, too-late attempt. Today, about $1 trillion is needed.
When President Reagan cut taxes and increased spending, the massive deficits saved the economy from the Carter "malaise" and inflation, and gave us growth and prosperity.
No, the deficits didn't cause inflation. Deficits never have. And no, our grandchildren never paid that debt and never will.
The government should use its money-creating power to save our economy by saving the largest companies in it. The longer the government delays and dithers, the worse the situation will become. Today, about $1 trillion is needed. Tomorrow, it will be far more.
Act now or face a depression.

Rodger Malcolm Mitchell
Virtually every editorial describes the financial bailouts as spending "taxpayer money." That is inaccurate. There is no relationship between taxes and government spending.
September 20, 2008
To 30 newspapers around the country

Virtually every editorial describes the financial bailouts as spending "taxpayer money." That is inaccurate. There is no relationship between
taxes
and government spending. The only taxpayer money is tax money. When the government spends money that it does not collect in taxes, no taxpayer money is spent.
The government spent $150 billion for an economic "stimulus package," another $150 billion for the troop surge, and billions more to bail out troubled financial companies. No extra taxes were collected, so no taxpayer money was spent.
Meanwhile, both presidential candidates advocate lowering tax rates. Clearly, no taxpayer money will be spent on the bailouts.
Question: If "taxpayer money" is not spent, whose money is spent? Answer: Government money. The government has the unlimited ability to create money, without collecting taxes. From 1980 to today, the government created and spent $9 trillion, unsupported by taxes. The government did not spend your money on those $9 trillion in spending. It spent government money.
Your money is spent only when you pay taxes. The government has demonstrated it can service any size debt, without collecting money from you. The media should stop using the erroneous term, "taxpayer money."
We taxpayers never will pay for the bailouts.
November 13, 2008
To 30 newspapers around the country, Senators Durbin and Obama, and Mark Kirk

Congress can’t fix the economy because our leaders are more afraid of deficits than of depression.
Last winter’s $150 billion stimulus mailing was a weak, tentative start. It should have been $500 billion to $1 trillion. Now, because an ounce of prevention is worth a pound of cure, a similar mailing of $3 trillion is needed.
Is fear of federal deficits justified? In American history, large deficits never have caused inflations, recessions, federal defaults or any other negative economic measures. Deficits actually cause growth. Because the government has the unlimited ability to service its debts, so taxpayers never will pay for deficits.
Congress acts as though the government can’t afford to prevent the coming depression. By delaying forceful action last winter, Congress cost stockholders several trillion dollars, not including trillions in real estate losses. Yet, even now, Congress debates bailing out the "big three" automakers, ignoring the disaster failure will cause.
Note to Congress: Federal resources are unlimited. Spend massively now and stop dithering. A depression will be far more costly than any stimulus package you possibly can imagine.

A large
economy needs a larger supply of money than does a small
economy.
Therefore, a growing economy needs a growing supply of money.
All money is a form of debt. Therefore, a growing economy requires a growing supply of debt.
U. S. Federal Debt is the safest, most controllable form of debt, because the federal government, alone among borrowers, never will default.
Thus, there is no
federal debt or deficit problem, and a
balanced federal budget guarantees
recession, and depression.